The 2026 Market Shift: Stability Returns
Towards the end of last year, we began to see a degree of stability return. Much of the uncertainty that had weighed on the market, particularly around fiscal policy and interest rates, started to ease.
Following the Autumn Budget, and with the Bank of England beginning to reduce rates from their peak of 5.25%, buyer confidence improved. By early 2026, base rates had already started to come down, with expectations of further gradual reductions through the year.
Performance & Valuation: A Window of Opportunity
This was reflected in activity levels. Data from agents such as Savills and Knight Frank indicates that transaction volumes in Prime Central London increased by approximately 10–15% in Q4 2025, with a noticeable return of both domestic and international buyers who had previously paused.
Pricing, however, has remained measured. Prime Central London values are still circa 15–20% below their 2014 peak, which continues to support London’s relative value globally. Sterling also remains relatively weak by historic standards, providing an additional advantage for overseas buyers.
5-Year Outlook: Sustained Growth
Looking ahead, Savills forecasts that Prime Central London prices could grow by approximately 15–20% over the next five years, with more modest growth in the short term and a stronger recovery as confidence and liquidity return.
This reinforces the view that, while the market may move gradually in the near term, the medium-term trajectory remains positive.
Macro-Geopolitical Considerations
That said, the current geopolitical backdrop, particularly the conflict in the Middle East — introduces a new layer of uncertainty. If inflation proves more persistent, this may influence the pace at which interest rates are reduced.
However, historically, London has consistently been viewed as a safe haven for global capital. Current data suggests that over 50% of demand in core Prime Central London locations is driven by overseas buyers, a trend that typically intensifies during periods of geopolitical tension.
The Development Perspective: Quality Over Quantity
From a development perspective, the fundamentals remain unchanged. Supply is constrained, planning remains complex, and there is a continued shortage of high-quality, turnkey stock. Demand for well-designed, finished properties remains strong, particularly from buyers looking for certainty and immediate usability.
Final Thoughts: The Path Forward
In summary, while there are short-term uncertainties, the underlying strength of the Prime Central London market remains in place. As developers, this means remaining disciplined in acquisitions and realistic on pricing, while recognising that demand for best-in-class assets is expected to remain strong over the medium to long term.
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